FY Third-Quarter Financial Results Briefing Material November 9, The Yokohama Rubber Co., Ltd.
Voluntary Adoption of IFRS Yokohama Rubber Group voluntarily adopted the International Financial Reporting Standards (IFRS) when the Group issued Yukashoken hokokusho ( Yuho, securities report) for 2017. The Group has restated its fiscal results for 2017 on an IFRS basis to facilitate meaningful year-on-year comparisons. 2
Scope of Consolidation, etc. Scope of consolidation Consolidated subsidiaries 127 companies (10 less than at the end of previous fiscal year) (Breakdown of change) Japan: -10 companies (Tire) Breakdown of transfers (Tire -10 companies) (Japan/Tire sales company) (Japan/Tire indirectly owned sales subsidiary) 3
Profit and Loss (Third-Quarter) Exchange Rates US$ 110 yen 112 yen (previous year) -2 yen EUR 131 yen 125 yen (previous year) +6 yen RUB 1.8 yen 1.9 yen (previous year) -0.1 yen TSR20 * 140 cents 172 cents (previous year) -32 cents *SICOM TSR20 1M WTI 67 dollars 49 dollars (previous year) +17 dollars IFRS JGAAP (for reference) 2017 (%) 2017 Sales revenue 460.8 455.5 +5.3 +1.2% Net sales 466.8 Business profit* 1 (Business profit margin) 35.6 (7.7%) 31.4 (6.9%) +4.2 (+0.8%) +13.4% Operating income (Operating income margin) 26.4 (5.7%) Operating profit (Operating profit margin) 27.0 (5.8%) 29.4 (6.4%) -2.4 (-0.6%) -8.3% Ordinary income (Ordinary income margin) 27.5 (5.9%) Profit * 2 16.3 21.8-5.6-25.5% Profit attributable to owners of parent 16.7 *1 Business profit= Sales revenue- (Cost of sales + SG&A expenses) *2 Profit attributable to owners of parent 4
Factor Analysis of Business Profit Third-Quarter Factors that boosted business profit (Breakdown) Natural rubber +5.1 Synthetic rubber +1.6 Compound agent -4.5 Other -0.3 +0.5 Raw material prices Sales volume +1.9 (Breakdown) Sales volume -4.1 Variable cost -0 Production costs Prices/ MIX +5.4 Fixed cost -1.5 ATG MB Factors that reduced business profit Other +1.1 +0.1-0 Business profit for previous fiscal year 31.4 Exchange rate difference -4.1-4.1 US$ 110 yen 112 yen(previous year) EUR 131 yen 125 yen(previous year) +0.9-2 yen +6 yen RUB 1.8 yen 1.9 yen(previous year) -0.1 yen Business profit for 35.6 Tires +3.1 ATG +1.1 MB/Others +0 2017 Business profit: +4.2 billion yen 5
Business Segment (ThirdQuarter) IFRS JGAAP (for reference) 2017 (%) 2017 Tires 317.1 321.9-4.8-1.5% Tires 333.1 Sales revenue MB 84.6 80.5 ATG 52.4 46.5 Other 6.8 6.6 +4.1 +5.1% +5.9 +12.6% +0.2 +2.8% Net sales MB 80.5 ATG 46.5 Other 6.6 Total 460.8 455.5 +5.3 +1.2% Total 466.8 Tires 23.8 20.6 +3.1 +15.1% Tires 19.0 Business profit MB 4.6 4.5 ATG 6.3 5.3 Other 0.9 1.0 Intersegment eliminations 0-0.1 +0.1 +1.8% +1.1 +19.9% -0.2-14.7% +0.1 Operating income MB 4.4 ATG 2.0 Other 1.0 Intersegment eliminations -0.1 Total 35.6 31.4 +4.2 +13.4% Total 26.4 6
Profit and Loss (Quarterly) Exchange Rates US$ 109 yen EUR 132 yen RUB 1.8 yen -4 yen +10 yen -0.1 yen TSR20 * 143 cents -38 cents WTI 65 dollars +16 dollars *SICOM TSR20 1M US$ 111 yen +0 yen EUR 130 yen -1 yen RUB 1.7 yen -0.2 yen 133 cents -21 cents 70 dollars +21 dollars US$ 110 yen -2 yen EUR 131 yen +6 yen RUB 1.8 yen -0.1 yen 140 cents -32 cents 67 dollars +17 dollars Jan. Jun. Jul. Sep. Sales revenue 309.7 +5.4 151.2-0.1 460.8 +5.3 Business profit *1 (Business profit margin) 23.8 (7.7%) +2.1 (+0.6%) 11.8 (7.8%) +2.1 (+1.4%) 35.6 (7.7%) +4.2 (+0.8%) Operating profit (Operating profit margin) 26.4 (8.5%) +6.4 (+1.9%) 0.6 (0.4%) -8.9 (-5.8%) 27.0 (5.8%) -2.4 (-0.6%) Profit *2 17.8 +2.9-1.6-8.4 16.3-5.6 *1 Business profit= Sales revenue- (Cost of sales + SG&A expenses) *2 Profit attributable to owners of parent 7
Factor Analysis of Business Profit First Half (Jan.-Jun.) (Breakdown) Natural rubber +3.2 Synthetic rubber +1.7 Compound agent -3.0 Other -0.5 Business profit for previous fiscal year 21.7 Exchange rate difference +1.0 Raw material prices +1.4 US$ 109 yen 112 yen(previous year) Sales volume -2.9 (Breakdown) Sales volume -2.9 Variable cost -0-4 yen EUR 132 yen 122 yen(previous year) +10 yen RUB 1.8 yen 1.9 yen(previous year) -0.1 yen Production costs -0.3 Prices/ MIX Fixed cost +3.5-1.2 ATG +0.6 Business profit: +2.1 billion yen MB +0.2 Other -0.2 Business profit for 23.8 Third-Quarter (Jul.-Sep.) US$ 111 yen 111 yen(previous year) +0 yen EUR 130 yen 130 yen(previous year) -1 yen RUB 1.7 yen 1.9 yen(previous year) -0.2 yen Exchange rate Raw material difference prices Sales volume Business +0.5 profit for -0.5 previous -1.2 fiscal year 9.6 (Breakdown) Natural rubber +1.9 Synthetic rubber -0.1 Compound agent -1.5 Other +0.2 (Breakdown) Sales volume -1.2 Variable cost -0 Production costs +1.2 Prices/ MIX +1.9 Fixed cost -0.3 ATG +0.4 Business profit: +2.1 billion yen MB -0.1 Other +0.1 Business profit for 11.8 8
Financial Position IFRS Sep. 30, Dec. 31, 2017 Current assets 353.6 362.4 Non-current assets 537.1 558.4 Total assets 890.8 920.8-8.8-21.2-30.0 Liabilities 508.9 533.0-24.2 Equity 381.9 387.8-5.8 Total liabilities and equity 890.8 920.8-30.0 Interest-bearing debt 297.6 315.6-17.9 Ratio of equity attributable to owners of parent 42.0% 41.2% +0.8% D/E ratio 0.80 0.83-0.04 9
s in Interest-bearing Debt, Total equity (Net Assets), D/E Ratio, and Net D/E Ratio Total equity / Net assets Interest-bearing debt D/E ratio Net D/E ratio 379.8 315.6 353.5 336.7 0.95 374.2 297.6 320.9 1.19 337.1 1.02 283.7 358.1 337.1 0.94 383.9 315.9 0.83 0.79 0.80 211.5 0.78 0.82 0.68 0.68 0. 66 0.66 0. 55 IFRS JGAAP * Total equity do not include non-controlling interests. *Net assets do not include non-controlling interests. 10
State of Cash Flows 2017 CF from operating activities 42.7 33.8 +9.0 CF from investing activities -29.5-28.1-1.4 Free CF 13.3 5.7 +7.6 CF from financing activities -28.8-4.7-24.2 Closing balance of cash and cash equivalents 42.1 55.9-13.9 11
Earnings Forecast for FY 12
FY Profit and Loss Projections (d from the previous forecast) Forecasts from Oct. 1 to Dec. 31, Exchange Rates TSR20 * WTI US$ 113 yen EUR 130 yen RUB 1.7 yen 133 cents 70 dollars *SICOM TSR20 1M Full year (revised forecast) 2017 Full year (actual) for 2017 result Full year (previous forecast) for previous forecast Sales revenue 650.0 646.3 +3.7 670.0-20.0 Business profit* 1 (Business profit margin) 61.5 (9.5%) 58.3 (9.0%) +3.2 (+0.5%) 63.0 (9.4%) -1.5 (+0.1%) Operating profit (Operating profit margin) 55.0 (8.5%) 54.2 (8.4%) +0.8 (+0.1%) 60.0 (9.0%) -5.0 (-0.5%) Profit * 2 36.0 40.0-4.0 40.0-4.0 *1 Business profit= Sales revenue- (Cost of sales + SG&A expenses) *2 Profit attributable to owners of parent 13
Forecast for Business Segments (Full Year) Full year (revised forecast) 2017 result for 2017 result Full year (previous forecast) for previous forecast Tires 455.0 459.9-4.9 470.0-15.0 Sales revenue MB 117.5 114.1 +3.4 ATG 69.0 63.4 +5.6 Other 8.5 8.8-0.3 Total 650.0 646.3 +3.7 120.0-2.5 72.0-3.0 8.0 +0.5 670.0-20.0 Tires 44.5 41.9 +2.6 45.0-0.5 Business profit MB 7.0 7.8-0.8 ATG 8.8 7.6 +1.2 Other 1.2 1.2 +0 Intersegment eliminations -0.1 +0.1 Total 61.5 58.3 +3.2 8.8-1.8 8.0 +0.8 1.2 63.0-1.5 14
Factor Analysis of Business Profit (Full Year) Full Year US$ 110 yen 112 yen(previous year) EUR 131 yen 127 yen(previous year) +0.2 +0.2 Exchange rate difference Raw material prices -2 yen +4 yen RUB 1.8 yen 1.9 yen(previous year) -0.2 yen Sales volume (Breakdown) Sales volume -3.0 Variable cost -0.3 Production costs -3.3-0.3 Prices/ MIX Fixed cost ATG MB Other +7.1-1.2 +1.2-0.8 +0.1 Factors that boosted business profit Factors that reduced business profit Business profit for previous fiscal year 58.3 (Breakdown) Natural rubber +5.9 Synthetic rubber +0.5 Compound agent -6.0 Other -0.2 Business profit for 61.5 Tires +2.6 MB/Others -0.7 2017 Business profit: +3.2 billion yen ATG +1.2 15
Cautionary Notes Regarding Forecasts Forecasts and outlooks included in this material are based on the judgment of the Company's management using currently available information. Actual results and earnings may differ from the forecasts and outlooks included in the material due to various risks and uncertainties. 16